To rent our property out, or not right now?

Question

Hello, guys! I wanted to get some advice on how to proceed with trying to rent our first rental property, the house we bought a few years ago.

A little backstory for clarification:

My wife and I live in Yukon, OK. We both work from home as freelancers, and for the most part, our income isn't too affected (yet). We've owned the house for 5 years and have worked hard since the end of 2019 to get it ready for renting.

We've planned on moving to Portland, OR because we love that area and worked hard last year paying off all of our debts so we can live comfortably while building our portfolio.

After crunching the numbers, we found the rental price will need to be pretty high for the market in order to cash flow, which I checked with realtors and the management team to confirm it would be possible.

Our plan was to rent it out April of this year and moving to Portland, OR (we have a property management company selected and onboard already.

I just looked at Zillow this morning and found there are only a few properties listed for rent, and at about half what we would need the price to be to cover the mortgage.

With the uncertainty of what's going on in the world, we're at a loss of whether it's a better idea to do one of these three options:

1: Proceed as planned, put it on the market, try to rent it and move to Portland in April/May

2: Rent it, find a cheap apartment in OKC and live there for 6-12 months and revisit the Portland plan later this year

3: Put renting and the move to Portland on hold altogether right now and focus on work right now.

Any advice would be helpful. We're looking for the best decision we can make with the asset and our funds right now.

Thanks!

Colleen F. · Answer

So this is the primary home you live in and you would need to get top of the market rent to cover the mortgage? I would postpone the move unless you have a personal reason to go to portland that is pressing (e.g. family health etc. ). It doesn't sound like it would be a great rental anyway if the rent is so close to the mortgage. That said a quick look at zillow does not give you market rent. Keep in mind even if you rented it tomorrow the renters situation could change with the economy which is in flux now.

Alyssa Dyer · Answer

@Neal Collins time will tell! From my pov buyers that are moving during the unknown do seem to have a bit power at least as far as negotiations right now!

Neal Collins · Answer

@Alyssa Dyer I’ve got a seller clients that are in this position. Interesting times, many optimistic about a quick bounce back but economists have much different opinions.

Alyssa Dyer · Answer

@Josh Doering it might be worth keeping an eye out for big price drops in Portland! You'll be purchasing there correct? It's all too soon to tell, but if there are any sellers that NEED to sell and many other people are holding out for the storm to pass.. you might snag a great deal!

Josh Doering · Answer

@Mathew Wray and @Cassi Justiz, thank you both for your thoughts about this situation. I agree with you both.We've decided to get the house completely ready and hold tight until this blows over.

Diane Dono · Answer

I would not do anything at this time. This pandemic and its affects will be longer than most people hope. Do whatever helps you sleep like a baby at night, if that is even possible these days, but I think you understand what I'm getting at!;-)

Cassi Justiz · Answer

Hey @Josh Doering, I wouldn't do anything now other than just hold tight and keep saving. If everything goes back to normal in the next few months, you can plan your move at that time and evaluate what the rental market looks like then. If everything doesn't go back to normal quickly, you may be able to get a fantastic deal on a property in Portland. :) People will always need places to buy or rent. But with all the uncertainty, they may not be willing to pay a premium for that right now. I wouldn't leave the safety net of your primary residence (and single mortgage payment) to add on any additional expenses at this time.

Mathew Wray · Answer

Me personally, I would pause your plan for just a few weeks. Eviction moratoriums are being enacted left and right and although they may not hit you in OK, is it worth the risk that you put a tenant in place and next month they can’t pay? If you have a year’s reserves saved up, go ahead and do it...just know that you’re coming to a city that’s about to lock down: tough to find a place or enjoy the area. It sounds like you’re both in a great situation so why risk over-leveraging yourself right now...give it 4 weeks and see what happens before making a move. In 5 years the memory of an extra month in OK won’t matter, but it could help you clarify the choices and options available to you now. Mathew

Kirk R. · Answer

you're owner occupied? & things are kept up & nice? How will you feel when a renter scrapes scratches dings hangs pictures stains carpet? hate when they smash the drywall corners with their suitcases! & then plays the cv card!? my feeling is if your house is 75% needing a paint & carpet/uplift is best time to rent. Otherwise you could have sold it at top dollar.

Josh Doering · Answer

That is correct, we bought it a few years back with the intention of just living in it and possibly selling it, but I feel like it could be used as an asset instead.I think that's my main concern is getting a renter in, moving and then not receiving the rent payments at all because they were let go from their jobs. Thanks for the response, @Colleen F.!